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What happens when debt goes bad. You can be moving along with your life, paying the bills. You have a good social life and social network when. Bang. The boss comes along and pulls the rug from under your feet, or you have an accident and can not work.

So what do you do? First things first, never never panic. this is the first mistake people make and it leads to many others, including sticking ones head in the sand and hope it all goes away. it wont.

There is only one thing to do and that is face it head on. As a Credit Controller for one of the Major International Banks in the UK. I deal with people in financial difficulties everyday. The one thing people always say when they finally talk to their creditors is. Why did I leave it so long. Most Creditors are only too happy to help you pay back what you owe.

There is help out there. There are many organizations around the world, whose job it is to ensure you get the best possible help, to pay back your debts in line with what you can afford. To ensure that everyone gets a fair amount.

If You are struggling with your debt then call your creditors today and let them know what is happening. YOU WILL NOT REGRET IT!

Okay so you have done the hard bit. how do you work out how much you can afford?

This is the easy part. honestly it may take you a bit of time but it is a breeze compared to telling your creditors you aint got enough money to pay them back. They won't be happy about it, but if you are upfront with them, then usually they will be upfront about you.

You may expect to get marks against your credit file, this is normal in this situation and these markers can stay on your file for many years. These are there for good reasons.

1. It helps prevent fraud
2. It prevents people from borrowing more than they can afford to pay back.
3. It protects the lenders from people not being able to afford to pay back.

These may be difficult to understand at first but once your on your way to paying back the debt you will understand.

The one easy way to work out how much you can afford it this

Take a piece of plain paper and divide it to three collumns. in the far right collumn mark this - INCOME. Mark the Second Collumn - OUTGOING and the third - CREDITORS.

This is fairly self explanotry. All income in the left, all outgoing in the right and every creditor, loan, overdraft in the creditor collumn. Add all the collumns up and subtract your outgoing from your income, this gives you, your disposable income. This is the amount we will use to pay back your creditors. This ensures you pay all your priorty debts, eg mortgage, rent, heating and so forth.

Now for the best bit of all.

Take each individuals creditor total and divide this with your total debt then multiply this with your disposable income. This will give you a figure. This is the figure you can afford to pay this creditor. Now do the same for each of the rest of your creditors.

Once you have done this. contact your creditors again and offer them this amount each month. Set the payments up by standing order or some other form of automatic payment.

Most creditors will accept this, as something is better than nothing and cheaper than going to court or taking leagl action.

Make sure you stick to the payments and keep them upto date with any change in your circumstances. even if you find you can pay less or sometimes more. Let them know and adjust your payments to suit your crediors.

Learn more about this author, Alistair Whyte.
Click here to send this author comments or questions.

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